The case for Airbnb's $50 billion IPO in 2018

March 29, 2017

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By Rohit Kulkarni, Managing Director, Private Investment Research at SharesPost

Very few companies in the private tech growth asset class have the growth and disruptive potential of Airbnb. Airbnb started as an online marketplace where users could rent out surplus or unused space inside their homes to host travelers. Today, Airbnb is well on its way to becoming the single largest disruptor in the $2 trillion-plus travel and tourism industry in the 21st century. With a $30 billion implied valuation, Airbnb is more valuable than some global hotel chains (e.g., Hilton and Hyatt), leading airlines (e.g., United Airlines and American Airlines), and online travel companies (e.g., Expedia and Ctrip).
Investors certainly have plenty of reasons to be cautious including competition, regulatory issues, and of course the most important one, the valuation. However, I believe that Airbnb has a credible case to go public at a $50 billion valuation or more, for the following reasons: 1) Airbnb faces a large and fragmented market; 2) Airbnb benefits from secular, demographic, and cultural tailwinds; 3) Airbnb is currently a clear leader in alternative accommodations space; 4) Airbnb has lots of ways to grow its business; and 5) Airbnb benefits from marketplace-style network effects. A complete analysis of a possible Airbnb IPO including a survey of 5,500 online travelers is available here.
This article represents the author's views only and doesn't necessarily represent the views of PitchBook.